Obvious Combinations Do Not Need to Be Physically Combinable

In Allied Erecting and Dismantling Co., Inc. v. Genesis Attachments, LLC, Appeal No. 2015-1533, the Federal Circuit affirmed the PTAB’s invalidity finding based on obviousness.

Genesis filed a petition for inter partes reexamination asserting that Allied’s patent to a multiple-tool attachment system would have been anticipated by, or made obvious over, the Caterpillar and Ogawa prior art references.  During reexamination, Allied amended the claims and added new claims, which were initially allowed by the examiner, but were then ruled as obvious by the PTAB on appeal. 

On appeal to the Federal Circuit, Allied first challenged the PTAB’s finding of a motivation to combine the Caterpillar and Ogawa references, arguing that the combination would require reconstruction of the device disclosed in Caterpillar.  The Federal Circuit explained that it was not necessary for the Caterpillar and Ogawa systems to be physically combinable to render the patent obvious.  Rather, the test for obviousness is whether a skilled artisan would have been motivated to combine the teachings of the prior art references to achieve the claimed invention.  Second, Allied asserted that Caterpillar taught away from combining its teachings with Ogawa.  But the Federal Circuit found that Caterpillar’s criticism of Ogawa’s design did not rise to the level of an express teaching away.

Supreme Court Provides Guidance On Fee-Shifting in Copyright Cases

In Kirtsaeng v. John Wiley & Sons, Inc., Appeal No. 15-375, the Supreme Court unanimously held that in fee-shifting cases for copyright infringement, courts should give substantial but not dispositive weight to the objective reasonableness of the losing party’s position.

Kirtsaeng purchased Wiley’s foreign-version textbooks abroad and sold them in the United States.  Wiley sued Kirtsaeng for copyright infringement and Kirtsaeng asserted the first sale doctrine as a defense.  In a previous decision, the Supreme Court held that the first-sale doctrine allows for the resale of foreign made books.  On remand, Kirtsaeng sought attorney’s fees under the Copyright Act’s fee shifting provision, 17 U.S.C. § 505.  The district court denied Kirtsaeng’s motion.  In denying the motion, the district court gave substantial weight to the objective reasonableness of Wiley’s infringement claim.   The Second Circuit affirmed.

The Supreme Court affirmed, explaining that the objective reasonableness approach encourages parties with strong legal positions to protect their rights, and discourages individuals with unreasonable positions from litigating.  However, the Court held that objective reasonableness can only be an important factor, not the controlling one, and the Court rejected the suggestion that a finding of reasonableness raises a presumption against granting fees.

Supreme Court Confirms That the Broadest Reasonable Interpretation Standard Applies to IPR Proceedings

In Cuozzo Speed Techs., LLC v. Lee, Appeal No. 15-446, the Supreme Court upheld the Patent Office’s use of the broadest reasonable interpretation standard for claim construction in inter partes review proceedings as a reasonable exercise of its rulemaking authority. 

Cuozzo challenged a Patent Office regulation requiring the PTAB to apply the broadest reasonable construction standard to interpret patent claims.  The Supreme Court reviewed this regulation for reasonableness in light of its text, nature, and the purpose of the statute.  The Court found that nothing in the statute’s language, purpose, or legislative history mandated the use of a particular claim construction standard.  The Court stated that Congress intended for inter partes review to be a hybrid proceeding in which the PTAB can revisit issued patents and consider amendments for possible reissue.  The Court also stated that the broadest reasonable construction helps to protect the public by encouraging the applicant to draft narrowly.

Supreme Court Overturns Seagate Willfulness Standard

In Halo Elecs., Inc. v. Pulse Elecs., Inc., Appeal No. 2014-1513, the Supreme Court overturned the Federal Circuit’s decision in In re Seagate that required a patentee alleging willful infringement to demonstrate, by clear and convincing evidence, that the accused infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent (“objective prong test”).

On appeal, the Court rejected the objective prong test as being unreasonably rigid.  The Supreme Court pointed out that the pertinent language of § 284 “contains no explicit limit or condition” on when enhanced damages are appropriate.  The Supreme Court also looked to its previous decision in Octane Fitness concerning fee-shifting in patent cases.  There, the Court explained what it meant for a case to be “exceptional” under the Patent Act, correcting the Federal Circuit’s previous misunderstanding of the term.  The Court found that the rigid objective prong test was also based on the Federal Circuit’s misunderstanding of what it meant for a case to be “exceptional,” further supporting its decision to overturn Seagate.